Life events can prompt changes in your insurance needs. Some life events cause your needs to go up. Changing jobs, having children, buying a home, or updating your estate plan can require purchasing additional coverage. But there are also some life events that actually decrease your need for insurance. Maybe your children have grown up and moved out, or you’ve paid off the mortgage on your home. Events such as these can reduce your insurance. Either way, your life insurance needs are at stake.

You haven’t revisited policies you purchased years ago. Life insurance proposals are written with the best of intentions and are based on the economic circumstances in which they are created. However, interest rates and market fluctuations can affect the overall health of some policies. Many clients who took out universal life policies in the 1980s incurred high interest rates when originally purchased. When interest rates declined, many people expected to find their policies almost paid off, only to find that they were in danger of lapsing. If you have a permanent life insurance policy, you should do an annual re-projection of the policy to make sure it is still going to do what it was designed to do.

The type of insurance you need has changed. In your retirement years, you’ll likely put more thought into your estate plan. Creating an irrevocable life insurance trust can be an effective way to transfer assets to your loved ones in a more tax-efficient manner, and to provide tax-free proceeds to cover expensive settlement costs.

You’re overwhelmed by the complexities of insurance policies. Insurance policies are complicated, and risk management specialists can provide clarity so that you can determine if your life insurance policy can deliver what your family needs. For example, you’re probably aware that life insurance can help provide an immediate source of income for your heirs upon your passing, but did you know that establishing an irrevocable life insurance trust can help maximize this lump sum?

New policies and features may better suit your needs. The insurance world is constantly changing, and new products are constantly being developed. A few examples in the life insurance arena include policies that can provide long-term care benefits and assist business owners with transition planning, insuring a key partner or employee, and securing business loans.

The key to an effective life insurance policy review is to consider everything in your risk management file. Our team of insurance specialists at Wealth Enhancement Group will not only help you discern how your policies are working for you, they can also help determine how they fit into your overall financial situation.

1. There are two ways to get Medicare, turn age 65 or become disabled.
Your biggest decision is choosing between Original Medicare (Part A and Part B) and the Medicare Advantage plan. If you choose Original Medicare, decide whether to buy a stand alone prescription drug plan or Medigap (Medicare supplemental insurance) policy. If you choose Medicare Advantage, pick a specific plan from a specific company.

2. There is drug coverage available.
Medicare now includes prescription drug coverage also known as Part D.
This coverage is optional. You can get prescription drug coverage through a Medicare Advantage plan. Some of them include drug coverage. Or you can enroll in a standalone Part D prescription drug plan to go with your Original Medicare coverage.
This is important to know: If you don’t sign up for Part D prescription drug coverage as soon as you become eligible for Medicare, you may pay a penalty on your premium unless you qualify for an exception.

3. Even for covered expenses, you’ll pay a share of the cost.
Medicare helps you get the health care you need when you’re sick, but you’ll still be expected to pay a share of the cost. You contribute to Medicare by paying taxes while you work. When you start to use your Medicare benefits, you’ll pay a share of the costs of the care you receive.

4. Your share may be larger than you expect.
If you choose Medicare Parts A and B, you’ll find that there are some expenses Medicare doesn’t cover. If you are seriously ill, these gaps create big bills. Some people who choose Medicare Parts A and B also buy a Medicare supplement insurance policy. Another alternative is to choose a Medicare Advantage plan that can also help you avoid these gaps.

5. Where you live makes a difference.
Medicare Parts A and B are the same across the United States. But other parts of Medicare (Parts C and D) are offered by private companies and may be available in specific counties, states, or regions, and not in others. There are Part C or Part D plans that offer nationwide coverage.

Traditionally, there have been 5 things that may impact retirement savings during retirement:
• Inflation
• Market volatility
• Taxes
• Health care costs
• Longevity
A comprehensive study by LPL Financial, United HealthCare, Age Wave and Northstar Research found that health care expenses are the #1 worry for people nearing and in retirement.

Why? People feel unprepared, overwhelmed and frustrated. Health care planning is one of the things you need to think about and understand how it may impact your financial situation, especially your distribution planning. Consider overall health, you should plan for good health and you should plan for not-so-good health, also called planning for the “certainty of uncertainty.”

It also helps to understand the types of available insurance, such as Medicare, Medicaid and Supplemental.

Is your cash value life insurance policy living up to expectations? Many whole life and universal life policies that were purchased in the 1980’s and early 1990’s were purchased with an underlying interest assumption that was significantly higher than it is today. At that time, insurance carriers were crediting policies with record high interest payments. Today, many of those same carriers are paying interest at record lows. All else being equal, a policy can’t help but to under perform.
If you are actively following your policy you may realize the effects of under performance by noticing less than expected cash values, projected lapse dates well before life expectancy, or perhaps even strong suggestions from your carrier to increase premiums.
Many life insurance policies that are being written today take into account recent mortality tables, maturity dates that extend beyond age 100, and much more robust guarantees. As a result, these new policies are often times a good alternative to a policy that isn’t living up to your expectations.

Be sure to seek the advice of a professional as to whether or not it would make sense to change.
* Guarantees are based on the claims-paying ability of the issuing insurance company.

Carriers that issue life insurance policies with guarantees similar to those mentioned above are reconsidering those products due to the heavy reserve requirements that come along with such a product. This is an important consideration for these carriers as they too are not immune to the significant downturn in the economy. Many carriers are considering removing these products from their product offerings or increasing costs.

Many of us have experienced a significant reduction in our net worth, some of which may have been intended for our children, grandchildren, or charity. Life insurance is an exceptional way to nearly and immediately replace that portion of your wealth and to assure that those you care about will still benefit in the ways you intended.

Product Pricing and Evolution
When it comes to pricing, life insurance products that are being issued today are in large part taking into account the 2001 CSO mortality table. The most widely used mortality table prior to the 2001 CSO mortality table was the 1980 CSO mortality table. As you can imagine, improvements in technology and medicine were significant over that 21 year period and as a result life insurance carriers assume clients will live longer and that assumption is built into lower annual pricing assumptions.

Additionally, thanks to improved technology and population mortality, life insurance carriers began issuing policies priced to age 120 and with language guaranteeing that as long as a certain premium is paid the carrier will guarantee coverage until the day the insured passes away, even if that turns out to be age 130, and even if there is $0 cash value in the policy. This is a significant departure from many of the life insurance policies in existence today.

Life insurance needs vary depending upon your personal situation. From term insurance to the many permanent products that offer guarantees and cash accumulation, choosing the right product can be confusing. Below is a brief overview of the various types of insurance that are available to help guide you in choosing which Life insurance is appropriate for you. Ultimately, I recommend contacting a Life Insurance professional for more information and to help determine what form is best for you.

Term Insurance – Term life insurance is a form of temporary insurance that provides a lump-sum payout upon death for a state period of time. Since term insurance can be purchased in large amounts and for a relatively small out-of-pocket expense, it is most suitable for income replacement and short-range goals (i.e., to pay off a mortgage loan, to fund a child’s education, etc.)
Death Benefit: Fixed
Premium: Choice of level or increasing
Cash Value: No
Goal: Pure ProtectionWhole Life – Whole Life is a form of permanent insurance that covers a client for as long as he or she lives and continues to make the required premium payment. Whole Life can be a good fit for achieving long-range goals, as the premiums remain the same for the life of the policy. In addition, cash values may provide money to help with temporary needs or emergencies that may arise.
Death Benefit: Fixed or Increasing
Premium: Fixed
Cash Value: Yes
Goal: Protection and Cash ValueUniversal Life –Read the rest of this entry »